Recession packs biggest wallop since 1930s: Study

April 28, 2009

OTTAWA – This recession is hitting Canada harder and faster than any previous downturn and Canadians are more exposed to economic ruin than they’ve been since the 1930s, says a report released by the Canadian Centre for Policy Alternatives (CCPA).

Exposed: Revealing Truths About Canada’s Recession examines the previous 13 economic downturns and discovers two troubling signs: no other recession since the Great Depression has come on this strong and Canadians face greater vulnerability than at any time since the 1940s because of low savings, high household debt and a weakened social safety net.

“Canada may have come late to the global recession, but the economic downturn is hitting the country with a force that is unparalleled in post-war economic history,” says CCPA Senior Economist Armine Yalnizyan, who authored the report.

The report notes Canada’s GDP drop and job loss figures have come on far more rapidly than any previous recession. It also raises a warning flag from the last two major recessions – the early 1980s and 1990s – which consisted of deep and prolonged job loss.

“The loss of 387,000 full-time jobs to date could well be just the tip of the iceberg,” says Yalnizyan. “Judging from past recessions, more job losses may be on the way. Canada took four years to restore the full-time jobs lost in the 1980s recession and seven years to restore 1990s recession job losses. Recovery could take years.”

Canadians are more vulnerable to financial ruin that any recession since the Great Depression. The report finds Canadians have the weakest unemployment insurance system since the 1940s; their personal savings rates low, comparable to those of the 1930s; and household debt levels were at a record high even before the recession began.

The report recommends improving benefits for the unemployed, given six of out 10 unemployed Canadians don’t get jobless benefits today. In the last recession, only two out of ten unemployed had no income protection.